‘Charles pushes past Wills as preferred successor’, read a headline in the Herald last Sunday. Following a wave of enthusiasm after the Queen’s diamond jubilee and last year’s royal wedding, the question of who will succeed to the British throne continues to capture New Zealanders’ interest.

Most kiwis still see New Zealand as part of the Old World and the wider Anglosphere. We’re also happy with the idea of being ‘reigned over’ by a British monarch, and are familiar with her likely successors.

But few would be so familiar with another historic leadership transition occurring closer to home, with much greater significance for our long-term economic and security interests.

Two factions of China’s ruling elite are immersed in a fierce lobbying battle behind closed doors to determine who will lead the country in the coming decade.

This once-in-a-decade affair is set to determine all nine positions in the powerful Politburo Standing Committee, and will be the first leadership transition of non-revolutionary era leaders. Most China observers see the likely outcome as an orderly transition to a factional balance between the elite ‘princelings’ – the privileged children of top revolutionary era leaders – and the Communist Youth League of China, drawn from China’s poorer, less-developed interior regions.

As the leadership transition approaches, Beijing faces immense social, economic and environmental challenges. The new leadership’s approach to these issues will have a major impact on the way New Zealand conducts its political and commercial relationships with China.

As a small, open economy, New Zealand is critically dependent on international trade. China is our second-largest trading partner after Australia, and with its economy predicted to overtake America’s as early as 2016, China can only get more important. Annual exports to China now top $6 billion, up by about $1.1 billion since last year, mainly led by the dairy industry.

However, the bulk of New Zealand’s businesses are SMEs, many of which have little or no experience in Asia, and are yet to take advantage of the lucrative opportunities presented by China’s growing middle-class market.

But it’s not a one-way street. We need to accept that the economic centre of the world is moving eastwards. We should embrace our growing Asian population and ensure that New Zealand is attractive to new Chinese investors, not just old Western friends.